Retirement Readiness: What to Review Before Your Last Day of Work

Retirement is one of life’s biggest transitions. While it’s tempting to picture it as the day you swap your office chair for a hammock, the reality involves important financial, healthcare, tax, and lifestyle decisions. Careful planning can prevent unpleasant surprises and help you step into this new chapter with confidence.

Cash Flow and Income Planning

The first priority is understanding how money will flow once the paychecks stop. A clear income and expense plan keeps your nest egg from running out too soon. If you have a pension, review the payout options—single, joint, or lump sum—and consider how they align with Social Security and life insurance. Don’t overlook pensions or benefits from previous employers, as they can be easily forgotten.

If you plan to retire early, weigh the impact carefully. Collecting Social Security before your full retirement age permanently reduces your benefit. In 2025, earning more than $23,400 annually while receiving benefits before full retirement age can trigger reductions, or $62,160 in the year you reach full retirement age. On the brighter side, if you leave your job at 55 or later, you can access your 401(k) without penalty. Married couples should explore joint claiming strategies, while divorced or widowed individuals may qualify for benefits under an ex-spouse’s or deceased spouse’s record.

The New Social Security Deduction

As of 2025, retirees aged 65 or older can claim a “senior deduction” of up to $6,000 for individuals or $12,000 for couples filing jointly. Combined with the larger standard deduction, this means the majority of retirees will no longer owe federal income tax on their Social Security benefits. However, the taxation framework has not disappeared. Benefits are still included in the IRS’s “combined income” calculation, and higher-income retirees may still owe taxes. For most, however, the new deduction significantly reduces the tax burden and extends retirement income further.

Healthcare and Insurance Considerations

Healthcare can often become the largest expense in retirement. Medicare begins at 65, but if you retire earlier, you’ll need alternatives like COBRA, the Health Insurance Marketplace, or a spouse’s plan. Marketplace coverage may qualify you for a Premium Assistance Tax Credit that caps premiums at 8.5% of household income. At 65, you’ll transition from employer-sponsored coverage to Medicare, and it may make sense to add dental, vision, or long-term care coverage.

Income level also matters. In 2025, exceeding $106,000 (single) or $212,000 (married) can trigger Medicare IRMAA surcharges, which increase Part B and Part D premiums. Beyond health coverage, ask whether your need for life insurance has changed. If long-term care is a concern, compare the costs of insurance, self-funding, or exploring assisted living communities. Review any existing LTC policy to confirm it still aligns with your needs.

Assets and Debts

Retirement affects more than just income. Stock options, grants, or restricted stock units may change in value or tax treatment once you leave employment. If you own a business, put a succession or exit plan in place. Review annuities and illiquid assets to ensure they align with your overall financial plan. If you have a loan against an employer retirement plan, resolve it before rolling the account elsewhere. For those with deferred compensation plans, coordinate payouts with other income sources to effectively manage taxes.

Scattered accounts can create confusion, so consider consolidating old 401(k)s or IRAs. A simpler structure makes it easier to manage and reduces duplication of effort. If relocation is part of your retirement dream, remember that moving to a different state can impact your tax liability, cash flow, and Medicare Advantage coverage.

Tax Planning Issues

Required Minimum Distributions (RMDs) can push you into higher tax brackets, so strategies like Roth conversions may help. On the other hand, if you expect a lower income after retirement, delaying conversions could save money.

The tax picture has also changed for retirees. The standard deduction was permanently increased in 2025, and when combined with the new senior deduction, older retirees can shield a substantial portion of their income from taxation. This change means that many households may not pay federal tax at all in certain years. Still, it also requires careful planning to determine whether standard deductions or itemizing provides the best outcome.

State tax rules still vary, so be aware of how your state treats retirement income. Don’t overlook unused vacation days—they may provide extra time off or payout before you leave your employer.

Estate and Long-Term Planning

Estate planning isn’t just for the wealthy; those with a higher net worth should also pay close attention to their financial affairs. Beginning in 2026, the federal estate and gift tax exemption rises to $15 million for individuals and $30 million for couples. This expanded limit provides more breathing room to transfer wealth without triggering federal estate taxes. Even if your estate is smaller, reviewing your plan is essential. Outdated wills and beneficiary designations on retirement accounts, life insurance policies, and transfer-on-death accounts can lead to costly mistakes. If charitable giving is important to you, consider exploring strategies that reduce your tax burden while supporting the causes you care about.

Investment Objectives and Risk Tolerance

Your investment portfolio should reflect the transition from earning to withdrawing. Some retirees lower their risk to protect savings, while others maintain a growth-oriented approach to counter inflation. Reassessing your risk tolerance at this stage ensures that your investments align with your needs.

Final Thoughts

Retirement is not simply the end of work—it’s a new phase of financial and personal life. Every aspect deserves review, from income and healthcare to taxes and estate planning. By addressing these questions in advance and making deliberate adjustments, you can replace uncertainty with confidence.

The hammock will still be there, but careful planning ensures you can enjoy it without worry. Retirement doesn’t have to feel like stepping off a cliff; with preparation, it becomes a bridge to the life you’ve been building toward all along.

WHWM is here to guide you in identifying your priorities, developing a plan, and making adjustments along the way. By choosing WHWM, you're partnering with our Founder and President, Stephen Bodwell. As a CPA and CFP® professional, Stephen is committed to helping you achieve your financial goals and aspirations. Don't hesitate to take the next step toward realizing your dreams. Schedule your complimentary, no-obligation 30-minute consultation with Stephen. 

Walnut Hill Wealth Management, LLC (“WHWM”) is a registered investment advisor offering advisory services in the State of Texas and in other jurisdictions where exempt. The information provided is as of the date indicated and is subject to change.